Abstract
The paper considers environmental regulation of a consumption good and an externality which influence demand and costs in a nonseparable way. Under monopoly two instruments are always required for first-best. The Pigouvian tax is more complicated than anticipated.
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Ebert, U., von dem Hagen, O. Pigouvian Taxes Under Imperfect Competition If Consumption Depends on Emissions. Environmental and Resource Economics 12, 507–513 (1998). https://doi.org/10.1023/A:1008215019489
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DOI: https://doi.org/10.1023/A:1008215019489